Another recommendation to buy now
first half of this year will be a good time to buy residential property,
says Tony Clarke, Managing Director of Rawson Properties.
Repeating this message for the third time in as many weeks, Clarke said,
"While it is true that none of us can tell when the market will bottom out, there is also a danger that those who wait too long will miss the boat and find themselves buying on a rising market. Right now, in my opinion, the buying opportunities are excellent and although small drops are still possible, these do not alter the basic message."
The National Credit Act, redundancies and the general reluctance by the banks to lend money, said Clarke, have caused house prices to drop across the length and breadth of South Africa with the result that there are now excellent bargains available. Sellers, said Clarke, are throwing in a great many extras, their plasma screens, electrical appliances like refrigerators, certain furniture, jungle gyms and sports equipment and even in one case a small motorcar in order to achieve a sale, whereas in the old days they most certainly would have taken these goods with them.
The predicted falls in the interest rate, said Clarke will enable more people to get onto the homeowners ladder than was possible in 2008 but, he warned, those contemplating a buy, especially those doing so for the first time, should study carefully the methods and tactics of that "small handful of well-informed investors" to whom he has referred on several occasions in press releases.
"What characterises these intelligent buyers is that in every instance they do their homework before they make a decision," he said. "They are very definitely not risk takers and they get all their information lined up. What is more, they accept that they will probably have to hold onto the property for five to ten years because it usually takes that amount of time for residential property to show a really significant profit."
Above all, he added, they take great care never to overstretch themselves financially, always making allowance for interest rate rises within the next decade, even if these seem unlikely at present.
"If we have learnt anything from the global recession," said Clarke, "it should be that it definitely does not pay to be overexposed. Markets, we now realise as never before, do not always rise and interest rates can be counted on to fluctuate at some stage."
Right now, said Clarke, there are still far too many South Africans in all income categories who are overexposed to debt.
Shrewd buyers, said Clarke, buy first of all to meet their own clearly defined goals, e.g. to be close to a school, to have more space or to be able to establish a work from home facility, but they always bear in mind at the same time, how the property will appear to subsequent buyers, those whom they hope will one day take over from them.
Very often, he added, dedicated to being homeowners, they will often buy in the less expensive area and upgrade a home rather than rent in a more fashionable district so as to gain the right social image. They know that, if they take the former course, they will accumulate a profit which will later enable them to move up socially.
Shrewd buyers, said Clarke, before making any decision, go through a long process of "educating themselves" about the market in which they are interested. They visit show houses in the area, they go to the Deeds Office and consult with non-aligned, independent agencies and mortgage originators to find at what prices homes in the area are sold. They are, in addition, adept at using the internet for research on residential data, both national and local which can help so greatly in setting current values.
Also, said Clarke, they chart the historic capitalisation rates of properties in their area over short, medium and long term periods and they make a point of checking out what major future developments are planned there. They will, he said, familiarise themselves with the ancillary attractions in the area, schools, transport, retail centres, sports clubs churches, synagogues and temples.
"All of this research takes effort but time and again we have seen how it really does pay off," said Clarke. "It is regrettable that too many buyers still rely on bar talk and the advice of one or two good friends who probably got lucky a year or two before and now feel they understand the market better than most."
Those reluctant to do the necessary research work, said Clarke, should either avoid the property market or team up with a really reliable agent, one dedicated to building up a long term relationship rather than achieving a quick one-off sale
Article from: Midrand Blog